SMBs have dealt with several obstacles over the past few years, including lack of access to finance, Brexit uncertainty, currency fluctuations, a turbulent economic and political climate. and of course the COVID-19 crisis. Colm Devine shares his reasons for setting up Accelerated Payments and his advice for SMBs looking to go global.
What gets you excited about trade?
Coming from a small island like Ireland with a limited domestic market I’ve always had an interest in international trade. From my first days in receivables finance I have been speaking to entrepreneurs who have made the bold decision to look at new markets and have been fascinated by the ways they have approached dealing with different markets and business cultures.
What made you launch Accelerated Payments?
Having spent many years working in receivables finance I felt there was a different way to approach the market as there was a large segment of SMBs who did not want to deal with the one size fits all traditional model of financing. I was constantly having to decline cases where the SMB had a weak balance sheet but was selling to a strong buyer. I felt that by switching the focus of a credit decision from the client to their buyer that there was a much wider group of SMBs that could avail of receivables finance. In addition, many potential clients I spoke to did not want to sign long term contracts and provide additional security. By applying a selective model I felt that we could attract a lot of first time users of receivables finance which has proven to be the case as we have helped hundreds of SMBs avail of flexible cash flow solutions over the past 3 years.
Why did you choose the UK and Canada to open your next offices?
When setting up Accelerated Payments we felt that there was a lack of funders catering for SMBs looking to trade internationally. We felt that there was a gap in the market to assist SMBs across a number of countries and decided to focus on markets we knew well. The team had networks already in place in the UK and Canada and we knew that our model would work in these markets. Ireland is also a very small market and the team had big ambitions so we always felt that focusing on several key markets would give us the best chance at success. We also choose these markets as they cater for a significant portion of trade between Ireland, UK and North America.
In your experience, how have more successful exporting companies prepared for exporting?
From my experience the best exporters have always conducted detailed research on the market they are selling to as well as the company they are looking to trade with. This would include looking for references from other clients the company have dealt with and putting in place a credit insurance policy to protect against any potential issues with non-payment. The problems I have seen have arisen when SMBs decide to sell to new markets without conducting the necessary due diligence and end up trying to chase payment in a market they don’t know with different legal processes leading to lost income which can have a significant effect on the business. Detailed preparation is required to make a success of international trade.
What tips would you provide to SMBs looking to export for the first time?
Here are my top 4:
- Detailed preparation is key
- Research the market
- Research your buyer, their track record and financial well being
- Look at your options for credit insurance, trade finance and receivables finance to de-risk the transaction.
What advice would you give to businesses that have concerns about exporting?
Many SMBs have concerns about trading overseas, particularly if it is their first time. My advice in addition to the above would be to speak to someone who has knowledge or experience of trading overseas, this could include your bank or finance provider, any relevant export association or even another SMB known to you. This will allow you to discuss your concerns and see what measures you need to put in place to ensure you have a successful outcome. We work closely with our own customers to help them export with confidence.
What are the risks of trading overseas?
The obvious risks involve late or non-payment of a receivable which can have detrimental effects on your cashflow. Many SMBs experience issues with late payment as some buyers try to take advantage of the inexperience of the SMB and the distance between them. These risks can be offset using credit insurance or trade/receivables finance. At Accelerated Payments our offering includes Bad Debt Protection which provides an additional level of comfort to our clients and allows them to trade with greater confidence.
Many companies also lose money from foreign exchange fluctuations. It is important to look at your options if you will be invoicing in another currency. Many companies can lose the benefit of any sales by getting their FX decisions wrong. Accelerated Payments work with an excellent FX provider that can assist with these decisions.
If you could give three pieces of advice to a UK exporter right now, what would they be?
- Research the buyer in detail. Credit rating tools can be great for giving you an idea of the credit quality of the party you are selling to but don’t be afraid to ask for their latest financials. You need to be comfortable that the buyer has the ability to pay for the goods or services you are providing. Many SMBs are afraid to ask these questions because they feel they risk losing the sale whereas losing money on the trade would in effect be much more detrimental for the business.
- Look into credit insurance to de-risk the trade. Many SMBs are put off by the additional cost of a policy but the cost of something going wrong is even greater so it is wise to carefully consider your options.
- Look at your finance options. There are funders in the market such as Accelerated Payments who can assist with providing finance on receivables from buyers around the globe. This allows you to gain access to funding straightaway as well as passing on the risk of buyer failure or non-payment to the funder.